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tv   Squawk on the Street  CNBC  May 28, 2014 9:00am-11:01am EDT

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own. i can either do that or -- >> grow your hair a little bit. >> i think i want to go all the way. do we have that? maybe we don't. had me with -- looked like -- there he is. >> he's the man. >> thanks for coming in today. >> thank you. >> that does it for us today. join us tomorrow. time for "squawk on the street." ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl kinquintanilla is in california at the inaugural code conference where heavy hitters in technology and media are making news. he's going to tell us more in just a moment. a look at the futures this morning. you can see not much to speak of in terms of where we will hope or what the day will look like. 10-year note yield, around 2.5, excuse me, 2.4 7.
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fran's 10-year yields, spain is at 2.88. just to put that in perspective. >> rates are way too high in this country. i'm not kidding. talk to frank blake, home depot. >> look at europe at this time, kind of a mixed bag. stocks started with small gains off the lows, about flat, let's call it in a lot of different ones. not a lot of news out of europe this morning. consumer staples, basic resources, health care lagging, financial services, banks, media and telecoms up. our road map and it does start with the markets. looking to make history, the s&p aiming for another record high. we've got earnings from toll brothers and michael kors, adding to what has been positive sentiment. lots of buzz at the code conference surrounding google's driveless car. carl is at the event and he is going to fill you in. m&a also in the spotlight as it has been lately. valeant increases its offer for
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allergan. ge making its case to the french for why it should be allowed to buy al sted. >> futures on the high after the s&p hit a record closing high for a second consecutive session, shy of 1912. on the earnings front toll brother which posted better than expected results, profits more than doubling. michael kors beating the street with its fiscal q4 results. global same-store sales up more than, man seems hard to imagine, 26%. >> i didn't like the gross margins. >> really? >> 26%. same-store sales. >> would be a little higher. >> that's asking for a lot. >> just telling you. >> they were giving up margin to make sales. 2 26%. come on. >> why the stock went from 98 to 95 and go over the conference call and they're saying they thought analysts were expecting 60%, did not meet the expectations. this is my friend herb greenberg all over this thing. look, yes, it's kate spade and
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this company are the two best in show in the accessory department williams sonoma best in show in all of retail. >> about a company that sports a roughly $20 billion market value. it's more than a double over the last year. well more. >> it's had the momentum and no one has those comp stores. then again, nobody -- no one can raise price here and, you know, i was hoping that kors would be able to tell a better story, but i'm looking for too much. >> if i'm an investor and see that run behind me, let's call it -- it's lower than its high as you point out. nonetheless should i be thinking margin compression, maybe things get a little more competitive. >> you just don't want inventory. you don't want inventory. >> right. >> you never want inventory. it's a push for a big momentum stock is not what people want. work-day is not a push today. kors never came in -- >> toll brothers this morning is going to be up in the premarket, up about let's call it about a
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buck and change over 4% or so. 35 cents a share, ahead of estimates. revenue $860 million, well above estimates there, were betting $827 million. >> i love this court sghooerts gross margins doing the right thing. 26.6, fiscal year 2013 backlog of units is 27. i think the average price of net signed contract after 729,000 versus 678,000 is good. they have a project in brooklyn that apparently is selling huge. i point that out because when you have manhattan real estate and brooklyn real estate you can raise the whole price of your average seller. >> they've got interesting projects right down by the water, at least they've had one some time. >> visited it this weekend. i'm a believer in toll. 67% unit growth. home building deliveries. this is a quarter that when you dovetail with the 2.4 you mentioned for the ten-year says don't short this.
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go long it. 37. >> let's back up into the markets. second consecutive session. we're right around 1912 on the s&p. no longer seemed that concerned about what was a tougher road in march and april. >> what's happened is that there's still one more rotation occurring. it is incredible. go over the workday conference call. this conference call, this quarter for workday which you know is one of the great software service companies, knows you well -- >> we know each other, yes. >> this is one of the quarters that had they reported three weeks ago the stock would be down today. >> you said software as a service as opposed to sad, which is something you coined, software as a disservice. >> there are faux software disservice. this is mark benoff the king of salesforce.com and this. a lot of companies that came public that were me too and not going i think to have a good run of it. workday very interesting to hear the operating cash flow, not as great as i wanted. >> right. >> but they won hewlett-packard
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which was a very big piece of business, won phillips and winning terrific not just human capital, their human capital software, winning finance including netflix. that's one to watch. it was a good quarter. they -- in the conference call -- >> to this important point. >> moving into a new area. >> in terms of a momentum stock with an incredibly high multiple we saw move from let's call it 50 to as much as 110 over a short amount of time, peaking when all -- so many of these stocks did in late february. >> february 28th, the day salesforce.com opened at 67, went to 668, plummeted -- went to 68 then plummeted. >> high 60s to over 110 a share. is this the end of the rotation, back to looking at okay, i'm happy with the multiple because the groth is there. >> that would be insane to do that. it would be insane to go back to the world that we thought was where we could value these companies on enterprise, value to sales. i don't like that.
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i do like the fact that they absolutely took another shot at oracle and sap and said don't worry about our business. we're not going back to that world. we're not going back to that crazy world. it does seem like a lot of sellers have finished in biotech. they finished in the high multiple tech. they finished in the momentum stocks but we're not going back to that world. that would be too glib. >> workday sold to you -- >> i like workday very much, but i don't like paying up here. how's that. >> i think that's -- >> i'm trying to be a diplomat. the company has the best product. that's not necessarily what makes for best stock. >> work-day headquartered out there in california where we find carl quintanilla at the inaugural code conference. good morning, carl. >> hey, david. man, if you guys -- if anyone likes technology it's been a pretty amazing 18 hours here at the inna nag gral code conference. we'll talk about what satya nadella talked about his role at microsoft, but the news of the day the google self-driving car.
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unveiled by sergei last night. the first prototype made from scratch, no steering wheel, no brake, no pedal. maximum speed 25 miles an hour although that could change over time. he sees couple hundred, 300 prototypes over the next several years and eventually this could lead to a partnership with someone like an ubber who by the way was a beneficiary of funding from google ventures. how does google go about building a car? sergei was asked about that by walt mossberg. here's what he said. >> you've worked with partners like in the detroit area and germany and california. we use automotive suppliers. this is using car parts that are kind of standard but sometimes we've modified them to our needs. >> how about the whole body. i mean -- >> yeah. we've worked with partners auto manufacturing firms that have helped us with a body. >> it so is the talk over the
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entire technology universe. aaron levy of box tweeted last night and i quote, google is literally making a car and it actually looks awesome. the future, he says, is going to be incredible. big lineup coming up today. among the people speaking, travis callnick of ubber, john chen of blackberry, jimmy i owe veen of beats and massason of sprint and here on cnbc, jeff weiner of linked in, eric po of hair ventures and brian roberts the chairman and see of comcast. 9:40 we'll talk to kara swisher who interviewed sergei and satya last night and why she named the google car phyllis and talk about her ride in the car which was done a couple days ago. >> phyllis? >> phyllis. >> okay. >> you are where the action is. extraordinary. the west coast is where innovation is taking place. the east coast is where
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financial engineering is taking place. it will be interesting to see if these stocks which return to momentum style, do not in the end fall flat because these are not earnings stories. they are pizazz. and right, carl? you're just getting a lot of pizazz. the car is not going to move google stock. but the retail investor likes the car. >> yeah. this is a long-term story. no doubt about that, jim. in a way, the point of the conference not to talk about business questions as brin would call it and less interested in talking about last night but more the visionary aspect of technology which is what a lot of these leaders are all about. >> right. >> they're not about inversions, they're not about smith and nephew getting a bid from stricker. >> that was an indictment of the east coast. there are technology companies here not just about financial -- >> teslas? flat iron building? google does have a big -- they
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could -- >> ibm is starting its watson center in the fall in the flat iron area. >> people telling me they have good stuff involving spectrum and be careful. don't go against ibm even though i am. >> even though you are. >> yep. >> we got so much more to talk about. >> carl is where -- i mean -- >> carl is where -- >> can we give you the ball? you are our running back today. we're playing defense, linebackers or cornerback maybe. >> i'll see you guys in a few minutes. >> he will take the ball in a few minutes. by the way, those drivers, driverless taxi in new york city one day but what about all the immigrants. the first rung, man there won't be any. >> we don't want robots -- >> 25 mile an hour driverless taxis. sha hail with your smartphone. maybe our lifetime, maybe the very end. >> can we just worry about the quarter? >> when we return by the way we'll talk about companies that
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are taking steps to make acquisitions or at least try to. first among them, valeant, which increased its offer for allergan. you heard jim mentioned smith and nephew, an ft story we'll take a look. another look at futures before we head to commercial break and pointing to a slightly higher open. more "squawk on the street" after this. .
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look at that, 2.473. i told you, of course, you can go to france and get paid a lot less, 1.7 something. but that's the lowest since july, jim. the lowest yield on the 10-year note since july. you come into this year saying i'm going to short that 10-year we're going higher, no. >> we should never have gotten to almost 3% a year ago. should never have happened. it was out of sync with the rest of the world, where the rest of the world was going and our rates are too high. one of the reason why toll brother wills not stop today. why this market does have legs, is because the market is going beginning to realize that lower rates make our businesses do better. this counterintuitive period going on for the last month we didn't like lower rates. >> a year ago remember we started that surge up to almost 3. >> it was wrong. >> markets got crushed. >> no demand there. >> bernanke initial comments there. >> made a mistake. it's okay. >> move on to m&a this morning.
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barely a day goes by we aren't talking about it. valeant pharmaceutical raising its offer for allergan. an unsolicited nasty battle, the cash battle up by 10 baux share. stock component remains the same and the ratio the same at 0.83 of a valeant share. also general electric improving its offer for alstom, according to an official in french president hollande's office. sources say that improvement includes a pledge to create 1,000 new jobs in france over three years. that news follows a meeting between hollande and the ceo of general electric, jeff immelt. i don't know where to start. then we got some news out of the ft. start with quickly dispatch with ge. my only question on ge announcement why they weren't more prepared for that response from the french to begin with and perhaps didn'ts do the outreach earlier that seems to be taking place.
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>> this is one of the things with why didn't you play the card immediately, we're going to higher people. that's all i wanted to hear. but all you had to do was say, you know what, this isn't about firing. it's about hiring. this would have been a snap. that's my take. jeff immelt, i'm not going to criticize try to do the right thing, but a case to be made that had they gone in this is a chance to make this company bigger i don't think you would have much of a debate. >> yeah. bit of a surprise perhaps they hit that road block early on. it does seem they're making progress. >> move on to valeant, progress may be hard to come by. allergan, i say finally, they had been taking a kid glove approach i would argue to combatting valeant's offer yesterday. they did not this morning. valeant as promised increases its offer, significant, 10 bucks a share in cash. the overall offer going to 58.30 for allergan.
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you can see valeant shares there, that's the key still. the currency is a lot of the consideration, though the cash portion certainly is higher. as you see. they are also talking about this product and a cbr that would be valued as much as 25 bucks a share depending on this product. it's for macular degeneration. it would compete against lieu sen tis. >> and also region ron, good luck. >> we'll get to -- >> so much more here. i'll go more in the faber report. that's ways away. but that cvr is another part. an endless presentation. 200 slides long that valeant began at 8:00 a.m. this morning with bill ackman, of course, who sort of is leading the charge for them as the largest shareholder in allergan. >> what do you think about the nestle involvement. >> that's another thing, right. selling certain products to nestle they acquired with
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medicsis. >> buy it for the idea of having restyla restylane, botox-like from your nose to your -- down to your chin. it works like that. for really wrinkles around the mouth. and juvederm is a product allergan has pioneered against that. what's happened is that you bought metasys. you fire a lot of people. next thing you know you sell the products for 1.5 because allergan has a product, they need this deal now. they got to get this done. that was a principle reason why they bought met sa sis. it is a rollup. >> valeant is a rollup and they need the deal for any number of reasons, including their strategy, of course, is to continue to acquire, use a low tax rate, use the strategy that they claim is completely misunderstood by allergan in terms of really efficiently using capital, efficiently looking at r&d, cutting a great deal of it. that's the strategy. by the way pearson in the presentation saying the nestle deal is a win/win transaction. the natural buyer and
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eliminating one more road block in terms of integration with allergen. save smith and nephew for the mad dash. >> and nestle, what are they. >> right. >> what are they? >> what are they now. >> they're big. >> a big -- they give you pimples with their chocolate and solve your face problems with this. >> up next cramer's mad dash as we count down to the opening bell and talk smith and nephew. a look at futures. back with more "squawk on the street" after this. i make a lot of purchases for my business. and i get a lot in return with ink plus from chase like 60,000 bonus points when i spent $5,000 in the first 3 months after i opened my account. and i earn 5 times the rewards on internet, phone services and at office supply stores. with ink plus i can choose how to redeem my points. travel, gift cards even cash back. and my rewards points won't expire. so you can make owning business even more rewarding. ink from chase. so you can.
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it is time for that mad dash. about seven minutes before the opening bell. we want to talk about consolidation in the parts business. i'm talking parts for people, stricker, smith and nephew. a story in the "ft" no confirmation from me at this point. read you some of it. citing sources, process at an early stage, exact value that stricker is putting on smith and nephew could not be ascertained but any offer would likely be above the 3.85 billion pound value, a report from the ft. that's why. exactly. >> get the right price. smith and nephew, hips don't lie, this is smith and nephew goes up against biomed. this is about hips, artificial hips. when you saw that merger the zimmer to buy biomet -- >> had been taken private many years ago, sold to -- right? >> you need to do a defensive
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acquisition. stricker buys smith and nephew, it's inversion, this is killing me that i didn't see this coming. because it's obvious that smith and nephew is a way to be able to do this inversion. it's a win/win. i think it happens. >> and i want to make that point. this would be another inversion. >> yes. >> for -- so stricker would, therefore, benefit from a lower tax rate in the uk and pointed out many times the ability then to start taking car that is overseas for deals in the u.s. without having to pay taxes on bringing it back because you would no longer be a u.s. company. in an inversion you do have to issue at least 20% of your company in -- the company you're acquiring has to receive stock in excess of or equal to 20% of your market cap. which does at least prevent the biggest of deals. if you're $100 billion company issue $20 billion in stock. that's not the case here. i wanted to make that point we talk about inversions left and right and all over the place. >> stricker is issuing a statement. one thing that's important stricker up big.
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this is the pattern. this is the pattern when you do the inversions, the buyer goes up too. i think people don't understand at home one of the reasons why this market is working so well, is because companies are doing deals and the market is lapping them up. so then your banker which you have told me over and over again, i want to do a deal. i want my stock higher. this is a remarkable time in this business. >> inversions are interesting as we said. >> stricker says they have no plan to make offer for smith and nephew apparently. >> where are you seeing that? up there. >> which would conflict perhaps with the financial times story. >> a dow jones headline that jim read you no plan to make an offer. >> this is how quickly things are happening. remind mess of the '80s, when you comment, general foods got a bid. gee. boom boom. gillette, come on. >> we are in a vibrant merger and acquisition market for any number of reasons, tax inversions a small part of that, although not insignificant. so much more to talk about as we watch stricker. let's see smith and nephew stock
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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell set to ring. let's update people on the story in real time. we -- i don't like to do that as you know, referencing somebody else's work. the stock was up with smith & nephew. referenced an "ft" story that said it was early but that stricker had made an approach. was conceivably going to make a bid for the company. since then under uk takeover long, different than here, they had to come out and put out a release and said we're not. we have no interest, no interest at this time in making a bid. that is a requirement under uk law when there's this kind of action. what's happening to stricker what about smith & nephew. >> when i heard about the deal that makes all the sense in the world. going to happen. obviously the "ft" fell prey
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itself. >> smith & nephew shares up as much as 10% there i would assume are moving. >> this is the day, remember the old days. bagged them, gunned them and liquidated them. it's a bad game. >> it is a bad game. >> another reason why i don't like talking about other people's stuff. you're watching the opening bell. you saw, you heard them, look, at the s&p real time exchange at hq, call it almost 50/50. a little more green. here at the big board, an aircraft leasing company celebrating the acquisition of international lease finance corporation. who owned that? aig. >> aig. >> at the nasdaq, overstock.com. >> got to keep in mind, aercall. when you look at the boeing list of customers, it's these guys and it's a company called aer lease. how do they know there's so many orders?
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? the leasing companies take them down and sell them to china. that's been a fabulous stock. 28% for the year. >> look at workday this morning, up almost 5%. 8580. >> workday. >> here's the problem. once again, workday is not what you wanted a couple of weeks ago. it's what you want now. all i can tell you is, i'm going to be at chartist for a second, i had a chartist on last night, i am not a chartist, but people who say this can only go up so far. cannot go back to the level it was because we're not going to make that mistake again and valuing these companies using one metric and the rest of the market using another. be careful boworkday. the stock has had a big run. >> what about this one? talking twitter up 2.5%. caught an upgrade today. >> nicely above $30. >> worst is over. i don't like worst is over but it does -- i mean there's got to be more of a reason.
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>> the worst is over. >> they have a mopub. >> a little over 2%. some will take that. >> you want craziness. here we go, barclay's raised the its price target. goes to 700. we're seeing stocks starting to bubble up again, i shouldn't use the word bubble, starting to appreciate because stocks have run up so much people are saying wait a second, this twitter lagged behind the rest of the group. let's get behind twitter. wish there was more rigor to this. >> i want to revisit hillshire brand, a story from yesterday, pilgrim's pride, making an overbid for the buyer, hillshire is buying pinnacle, trying to break that deal making a deal for hillshire. under its merger agreement has the opportunity to its board to review what it might view as a superior proposal. $45 a share. all cash offer. pilgrim's pride controlled by the brazilians. >> right. >> jbs.
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some thoughts now going the other way saying hillshire is a maryland company, very -- you can do a lot of things under maryland takeover law to say no. let's just leave it at that without getting into it. >> more like pennsylvania than like delaware. also you have a young ceo at hillshire and you do have the opportunity, should it arise, should they want to, to change the consideration of their offer for pinnacle so it would no longer require a shareholder vote. they would no longer be offering 20% of overall cap in stock. >> in other words, it can accelerate the pinnacle buy which frustrates the hillshire -- pilgrim's pride i'm sorry. >> there are ways they can do that under advantages over maryland takeover and the consideration so their shareholders would no longer have a voice. doesn't mean any of that is going to happen but i bring it
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up. people have been talking about it, bubbled up. i didn't mention it prominently yesterday in my coverage of this deal. >> we have to understand that there's this deal, the hillshire deal important for hillshire to get pinnacle. in the so-called center of the supermarket, there has been -- there have been no growth why? because of the ways of the world, people want natural and organic and when you are buy in jimmy dean you're not getting natural and organic. hillshire needs to buy bird's eye trying hard to be natural and organic. these companies are all challenged. believe me, the meat section is not a place to be. in the supermarket these days. it's not. >> it's just not a place to be in general or -- >> i'm growing quinoa. >> would you stop with the quinoa. >> stop with the quinoa? >> that's like stopping with 3d
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printing. >> who likes eating quinoa. i'm sure it's not bad. >> does it matter if it doesn't taste good. >> rolls off the tongue nicely. >> we've got some mcdonald's news out i'm told here. just taking a look here. >> that's not quinoa. they do not have quinoa burgers at mcdonald's. just pointing out. >> mcdonald's today announced an intensified commitment to the customer focus, strategic framework, plan to win and other actions to enhance long-term shareholder value. they say they'll return 18 to $20 billion to shareholder between 2014 and 2016 through a combination of dividends and share repurchases that represents a 10 to 20% increase over the amount of cash returned between 2011. >> people want -- they wanted more. they were hoping there was some sort of financial play that mcdonald's could do using the balance sheet to get things going in order to be able to overlook what they serve at mcdonald's. there's also a sense that
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people -- mcdonald's better start getting with the loyalty program, the starbucks idea. it's not happening. the company did admit to carl quintanilla out on the west coast they are behind in much of the social and mobile. starbucks going to china. why? having a meeting with the parents of people who work at starbucks. howard schultz understands the culture versus ibm which seems to be helplessly left behind in china. doesn't understand the culture. >> sometimes you let things out i want to stop out for a second. hopelessly left behind in china is ibm. >> howard schultz meeting with the parents of people who work at starbucks. he understands the culture. >> i've had guys 20 years in klein that don't understand the culture. >> my travel trust sell the ibm because when i see they decided the banks are told -- that's a communist society. they don't have like the federal reserve. i mean you get a call from the party and it's the ibm stuff got
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to come out, the party is over. >> finally i want to get to bob pisani, but kors is 3.5%. >> you know what, it is so fricky. understand -- tricky. inventories up 68% versus 49, thank you to stephanie link for giving this to me. the gross margins said to be up slightly, did rise 20 basis points. even kate spade had margins that were down. it's a battleground, david. it's a battleground. >> kors is a battle ground. >> it's a battleground. >> to bob pisani on the floor has a lot more on what is moving. bob? >> good morning. a little mixed market today but there's been a change in tone. we had a trendless market that complained about it, traders aren't making money. a more clear trend in the last few days towards higher cyclical names doing better. put up the markets in the last five days. you see tech stocks, you see consumer discretionary stocks and financials outpassengeerfor. telecom, and consumer staples
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are lagging the market. a little more of a cyclical tone to the market. the big discussion, though, is whatever happened to volatility. did you see citigroup's comment yesterday trading revenues down 20 to 25%. jpmorgan said the same thing. to make money you have to have volatility and market trend. up until recently haven't had it. interest rates lower, derivative volumes are lower, equity fund flows are lower, even the foreign ex guys are lower. partly the regulators. if you start closing all the prop trading desks they're major risk takers not here. when you have investigations into everything from foreign exchange to libor reduces anybody's willingness to take any risk and trade at all. but i think the biggest issue here right now the economic data being a lot more mixed. that makes investors a lot more uncertain about what the economy is doing. that reduces the conviction levels and that is what's causing the major pullback that
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we are seeing right now. topic right now on the street. move on and talk about the banks. a lot of people are saying banks have trading problems are also saying, hey, listen, m&a activity is very good, ipo activity good, secondary activity is really good, overall and there's a lot of bank bulls out there that have been strong recently on the mixed side today. i want to move on and talk about kors. how eye-popping are the kors numbers. i couldn't believe these numbers. north american revenues up 43%. 43%. same-store sales up 20%. european revenues up 125%. same-store sales up 62%. their guidance for the full year were above street expectations. take a look at the stock. the stock was what, i don't know, $40 or so. year and a half ago. now close to $90. so incredible numbers from kors. tolls, excellent numbers. bottom line beat the top and bottom line and still able to
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raise prices. nice move up for the home builders. back to you. >> thanks very much, bob pisani. take a look at shares of allergan. start there and give you a little more detail. i believe that presentation still going on in midtown, manhattan where valeant's ceo michael pearson of course there, the hammer they also have there named bill ackman, bringing the war so to speak, bringing the rain, also presenting. allergan shares remember it's 58.30 a share in cash, allergan shares down over 3%. the new bid perhaps not as high as some had been anticipating, although they did raise by 10 bucks a share in cash. as you might also expect they are using the opportunity to fire back at what were the first really harsh i would argue allegations from allergan yesterday when it came out and started to really try to undermine valeant's business model and its stock price for the first time in what is going to be a long running battle.
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by the way, this thing is going to go on for months. no timeline, nothing going to stop it. they will have a referendum fake annual meeting. >> fake annual meeting. >> ackman has called for. that's not going to mean much of anything. valeant has given them the written opportunity. new bid 5830 and then the cvr of darpin, a quick spin on darpin, this drug, jeffreys saying that there's a less than 50% chance it gets approved, allergan rerunning a trial, next update in a few months. >> for macular. >> yes. >> be careful. >> need another phase two. >> i told the ceo, has not taken the gloves up until now because they've a gent, it's a long shot, crowded category and len has this to himself right now with the -- he will' say lieu
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zen is. conceivably returning as much as 25 bucks a share. not getting the market at least according to when jefferys analysts until greers now and $20 billion in sales, wow. very aggressive. that's that. >> way too aggressive. >> valeant clearly the opportunity to respond to allergan from yesterday. you may remember allergan's assertion, for example, on any number of things including valeant's tax rates saying recent space of acquisitions and restructuring appears to have resulted in multiple offshore tax deferral structures. >> right. how about -- >> taxing authorities likely to heavily scrutinize and transfer pricing. valeant's response, jim? you do not have multiple deferral structures. our tax structural is compliant with laws and undergoes the same scrutiny as other public companies. >> the idea that valeant reports whatever is convenient. did you love that line? whatever is convenient. they hate each other. it's a slug fest. it's a thriller in where? >> what happens if valeant -- >> canada --
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>> successful in buying allergan? >> they're unsuccessful? >> yes. >> valeant needs to do every deal. if you lose the met sa sis products which they made a lot of money for, the facial, you fall back on the bausch & lomb, which has been okay. >> talk about significant organic growth combatting what is the argument from allergan saying that they're actually raising prices losing market share. >> my friend herb greenberg right on kors has been saying over and over again, valeant must do deal after deal to keep things rolling. i'm close to the met sa sis deal, iced to have shack -- i used to have shack on all the time, the ceo. one of the things shack did built a company on generic which is the skin -- but he did have this great franchise that allergan was a eviscerating and piatt knew that and they offloaded to nestle. this is make or break for
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valeant. in my take. >> we'll be watching all of it closely. >> i don't know. joe -- >> let's head now to the bond pits and rick santelli in chicago. >> well, here we are at the center of action. they say that the rally in stocks is most unloved rally. no doubt that rally in treasuries is the most misunderstood. that's for sure. ask ten people why, you get 30 different reasons. maybe the bestp are if there's anybody out there willing to invest billions in the treasury complex or sovereign rates around the globe at these levels, that in and itself almost says it all. chart of fives, goes back to march of this year, since we've had a yield at this level on a closing basis under 1.50. let's look at the 10s. obviously the benchmark of trade. see the intraday and new low, 2.46 handle. if you open it up these are fresh lows should we close here, all my comps based on closing levels, would be early july of
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last year. we're getting closer to one year. why today on a know day to day. there is a lot of technicals. goldman story that nobody wants to trade anymore, markets are boring, fully rigged, fully priced and boring. but, but look at the month to date, still technical events going on. previous low yield close 2.49. we went through 2.49 like a hot knife through butter once we violated it. if we look at a 30-year bond longest guy in the curve comping back to june of 2013 since we've been ats they sub333 levels on a closing basis. 10s to 2s, i know we had a 2-year note action and new 2 year on the block. today a new 5-year on the block. doesn't dismiss the rollover process validity, 10s minus 2s now the flattest since june of last year. the euro versus the dollar making fresh lows back to early february and maybe the most important one, is the dollar
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versus the yuan. testing levels we haven't seen since the fall of 2012. david, back to you. >> oh, man. that is serious movement up there. up next we are heading out to the west coast. carls a got a lot more from the code conference in california. he's right here to tell us what's coming up. carl? >> hey, david. we'll talk to kara swisher about day one of the code conference including her ride in the google self-driving car and what she thought of satya nadella's conf comments when we come back from the code conference. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon.
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♪fame, lets him loose, hard to swallow♪ ♪fame, puts you there where things are hollow♪ the evolution of luxury continues. the next generation 2015 escalade. ♪fame self-driving cars and contact lenses and more. sergey brin mentioned some of those in the pipeline at the code conference in california. kara swisher the co-executive editor of re/code. congratulations on what is
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turning out to be an amazing conference. >> lots more today. >> you drove the car? >> yes. >> i didn't drive the car. i not drove the car. >> exactly. >> your thoughts? >> i liked it. it felt like a disney ride in a weird way but it was -- it was nice. you could just sit there and it just went and so it was sort of odd. like riding in a bus or subway or something like that. it felt a little like public transportation. >> sergei did talk about in cities when traffic is at a peak a lot is people looking for parking this removings a lot of that. how do you think this is going to play in our daily lives? >> they will build a couple hundred he said, between 100 and 200. not going to affect anyone's daily lives but interesting if it got out into the wild and they could do these things and use them as fleets of cars. you could see uber being the reservation system. that's what's interesting about it. it has the sensors not to hit people which is great. which is interesting. you know, we tried to hit the guy who runs google car --
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self-driving car and he stood front of the car and it stopped in front of him. >> sergei talked about loan loan, other google products. how do you think an investor is supposed to evaluate these things when they're not going to move this quarter or next year or year after that even. >> google science projects and pretty cool. i find some of the others kind of interesting, but i don't know. the car, car is a really interesting area no matter how you slice it, self-driving cars on the way and google is at the forefront of this experimenting which is interesting. who's going to make them? not google. detroit will or some point. but at the forefront of this thing which is important is i think a very interesting trend. i don't think it will -- they won't be making cars. >> right. satya nadella, you talked to him last night, talked about his role in microsoft and then the demonstration of this real-time translator. >> yes. >> with skype which satya actually talked about how it gets better over time. take a listen to this. >> not only have we not put
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facial recognition in glass, but we've actually asked our glassware developers not to put that in. it would be certainly a handy feature especially at a conference like this it's just, you know, we also -- you know, there's a lot that we've bitten off with this project as is and i think the facial recognition is an area that society is still formulating its views on. so there's a hundred other things for us to work on first. >> all right. clearly the wrong sound bite but satya nadella did speak, i think we have that, guys? >> what happens is say you teach it english it learns english. then teach it mandarin, it learns better but becomes better at english. teach it spanish, good at spanish but great at both mandarin and english and quite frankly none of us know exactly
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why. it's brain-like in the sense of its capability. >> little scary. >> your thoughts about that? >> it was interesting. talking about big data. really interesting. i thought it probably didn't get as much attention as the cute car that drives itself but a significant idea, to be able to talk instant fly a phone some day and it translate instantly. this was a crude version, not crude but pretty good. not the same thing. over skype. if you got on a phone with someone in, i don't know, in an arab country and able to speak quickly. >> change the world. >> it's interesting. the star trek thing. once the data gets together it's going somewhere. >> jam packed day. we'll talk to you soon. kara swisher from re/code. stop trading with jim in a moment. we needed 30 new hires for our call center.
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and this loosens the short. my favorite is stratasys, better industrial name. be careful retail. i know you love 3d. i know you will come after me at jim cate cramer. i don't care. >> that's what i like to hear. not good. 53.25. >> break print it means that squeeze is being broken. okay. they're going to do it for acquisitions. that's why i like stratasys. the public is way too long with 3d systems. >> what do we have on "mad money"? >> coal tonight, union pacific. brand new facilitypy. nick has been remarkable. these coal companies look he squeezed his governor wants coal, the unions, feds don't want coal. he's trying to figure it out. figure out with him. he's paid a great dividend and a great man. >> all right. 6:00 tonight. "mad money." i'll see you right back here
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♪ our road map starts with google. the tech giant making headlines at the code conference unveiling its driverless car. former gm executive bob hurts will weigh in on what it means now. >> morgan stanley's chief u.s. equity strategist adam parker tells us where we should be investing. >> miking kors seeing a boost in revenue but its a struggling stock. we'll break down the fourth-quarter results. >> live from the first ever code conference in ranch cho pal los ver des california. our heavy hitter carl quintanilla is there with driverless cars. thank goodness there's not driverless shows. >> it has been an amazing day one of the code conference. the driverless car out of google. satya nadella demonstrating that real-time language translator
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out of skype. today's the day it's going to get interesting. some of the speakers coming up later this morning here in rancho pal less ver daes, travis kalanick, jimmy i owe vin and massa son. an here on cnbc our boss, the chairman and ceo of comcast, brian roberts, a day after "the new york times" editorial board comes out against that would-be merger or takeover of time warner cable. we'll talk to brian how he's trying to sell that deal. that's coming up later on. the driverless car, phil lebeau will talk with lutz and others about what that might mean for traffic around the country. back to you. >> everyone is talking about it over there. carl, good to see you. looking good out there. tieless in california. check back in with you. the dow in the red, s&p 500 also lower, but we're still holding
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near record highs. let's talk about it with adam parker with morgan stanley. you're optimistic. you say the markets are headed higher even though we counted 12th record high of 2014 yeah. our base case we grind higher, end the year at our price target of 2014. we see earnings improving and think the fed remains, so that's a good backdrop for equities. >> explain why the 10-year yield this morning hit the lowest level since last july? >> well, you know, our interest rate manager covers the 10-year, his view is that, you know, there's been tactical and positioning issues around that. my view is that earnings are growing, my view is that while the economy is improving, going to improve less than the consensus expectations and if the fed stays accommodative that's a good scenario. i don't think the base case is that great, sara.
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i think it's more that the bear case isn't that likely. equities can do well as long as people don't see a high probability of the bear case forming. >> something important is happening here. somebody described the markets in this country as zen-like overnight. it's this steady okay, maybe it is a steadily rising market but you are in a position where some of the big investors have retreated to the sidelines, not getting the big bets, the volatili volatility. people may not care citi's trading revenue according to the cfo may be down 20% on the quarter like jpmorgan's but should they care that some of those very big bets have gone wrong if notably, of course, as far as sara references on the bond market, the fact that yields are moving in the wrong direction. if you were looking for economic recovery. >> yeah, sure. i mean look, historically to get a higher p/e or price to earnings ratio for the s&p from these levels you want higher real yields. you want the economy to improve. you want that improvement
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without cpi. that's a good backdrop for multiple expansion. we saw some of that in 2013. i think it's pausing out right here. you know, look, i don't really talk very much about the s&p level when i talk to investors all day long. we talk much more about what's going on underneath the growth rotation or small cap or, you know, what's happening with -- at the sector or an industry level. there's been a lot of volatility underneath the market even though the s&p level just keeps melting higher. >> so i mean what is -- in terms of volumes, do you feel that this is the calm before the storm or do you feel that something is fundamentally changing? did you see out in the global trade is slowing down. quite a sharp contraction in the first quarter down 2.6%. in an environment where as we learned yesterday, house prices are no longer accelerating as they were. something is going on. surely. >> no, i agree. i think the economy is improving at a rapid rate than people
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suspect. we're also tapering. that's a big difference. you don't hear people focusing on it much. the big difference between this year and where we were a year ago, a year ago we called it the hall pass. that good economic news was good for the market, bad economic news was good for the market because there would be more qe. that's 2013. i think now it's different. good news is going to be good, but bad news is going to be bad. i think that difference is because we're tapering and don't see what the incremental accommodation could be from the fed there's a different tenor. >> that's right. the earth has rotated back to normal axis or whatever. >> i want to mention, volatility, which remains remarkably low. citigroup talking about this yesterday. the cfo warning about a drop in trading revenues, all the banks are talking ability how the investor is uncertain. is anyone making money off of this record run in stocks? >> i think people are definitely making money off the run at stocks, sara. i think underneath that, it depends what your bets were but
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the reason the volatility is low, all the questions i get if i think about it, can the fed act early, u.s. economy impro improving, is europe improve be, china hard landing, every question is really what could introduce volatility into the earnings estimates. because as long as the earnings estimates you can't see what's going to make them go down very much, what i toll you is the s&p never goes down by 10% unless people are afraid of an earnings recession. i don't see maybe that's consensus but i don't see what causes a big correction in earnings in the second half of the year. >> you like technology? >> sorry? >> i want to ask you quickly in the time left about technology. the nasdaq back near 13-year high, looks like tech names are back in favor like the apples and facebooks of the world. do you like that sector? >> we have ap been recommending on the growth side software in particular, particularly relative to growth, names in consumer. i think the software companies are where companies are investing.
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not hiring and not doing ppe. they're investing in property activity. in tech we like software, sara. >> all right. adam, good to check in with you on these markets. 2014. >> good to see you. >> year-end target on the s&p. adam parker of morgan stanley. >> bye. >> google's driverless car is getting buzz this morning. let's get perspective from bob, the former vice chairman of general motors. he joins us on the news line as we play the pictures out for people who haven't been able to see the car. welcome to the show. bob, can you hear me, bob lutz, are you there with us? we couldndon't seem to have bob. a market flash with dom chu. >> okay. so let's talk about what's happening with two shoe companies walking in opposite directions. first of all dsw shares moving lower after weaker than expected first-quarter results. citing what else, bad weather and the aggressively promotional environment. the stock is currently at least up about 10% here.
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a different story for brown shoe, up 10%, posted better than expected first quarter earnings driven by athletic shoes, as a result raised 2014 and 2015 guidance going the opposite direction up about 10% in today's trade. very interesting on the earnings side of things when you see the dichotomy, the separation. something that perhaps adam parker was speaking about. back over to you guys. >> all right. thanks, dom. up next, live from the code conference, the chairman and ceo of our parent company, comcast, brian roberts. he'll sit down with carl and julia in california. "squawk on the street" will be right back.
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google's driveless car getting buzz this morning. back to bob lutz former vice chairman of general motors. >> i can hear you fine. >> great to have you on the program. we should explain to people just tuning in this is a real important departure, this is not a conventional automobile where humans can suddenly take control if something goes wrong. this has no steering wheel, no pedals, totally auto mow mated. the human completely out of the loop. what do you make of what you see now? >> well, i think it's very impressive, but basically it's just a bundling of technologies that have been around for about 10 or 15 years. gm and other companies have demonstrated a driverless cars to the defense advanced research
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project agencies for years. what's happening is all of the stuff is becoming more reliable, it's becoming somewhat less expensive, although let's face it, those google cars still have some components in them that would raise the price to 200 or $300,000. it's not exactly affordable yet. no, all the technology definitely works and you can say well, will one of these driverless cars ever malfunction and have a crash? the answer is yes. will people continue to be killed? the answer is yes. but, the other part of the answer is, probably 1/20 as much due to human error now and especially the global youth, unfortunately, global youth of alcohol while driving which is probably the cause of most accidents that driverless car will not do that. >> so i mean, what is the
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commerce small demand here do you think? clearly the price is going to come down. that's what always happens. i can imagine a lot of rich people, a lot of airports or private estates or people that basically if they've got a route they want to take people by the spa to the lodging area would want this now. >> well, they can't have it now because it's not reliable enough and it does, to some extent, depend on knowing where all the other cars are. and one of the things that's going to happen -- has to happen is, all cars at some point are going to have to be transponder equipped like all aircraft are. with that technology, every airplane knows where every other airplane is. that's essential for a network of driverless cars. nobody is expecting this for another ten years, maybe 15 years or 20 years. and it will probably start with large urban fleets like taxi
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fleets or mail delivery and stuff like that. but we do have to -- you do have to be conscious of the fact that there are still things that this car cannot do. >> right. >> it can't recognize signs. you know, for instance, you're driving past some place and it says puppy for sale, take next exit. the car will not be be able to read puppies for sale. it cannot read hand signals from drivers. somebody stuck in an intersection and their car has stalled and they wave you through the intersection with their hand, the driverless car can't sense that. if there's a human policeman as there often are at crash sites and stuff like that, it does not know how to read human hand signals. so ts's still a lot of things that have to be perfected but make no mistake about it, 25 or 30 years from now, all of the
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major highways will be automated and these fleets of driverless cars with very minimal nose to tail difference, almost like a railroad train, will be moving -- sorry. >> bob, i don't mean to cut you off but if that is the vision and you don't seem that impressed with the technology and innovations in this, why is it coming out of silicon valley, out of google? why not detroit, general motors or ford? why aren't they coming out with this kind of innovation. >> wait a minute. detroit always makes cars. detroit does not make the technology that goes into the cars. like advance braking systems from brake suppliers. advanced fuel injection systems come from bosh or nipupon. the automobile industry has always taken the technology from suppliers and integrated it into cars. google isn't going to make cars. >> sure. >> google is going to supply this stuff to the automobile
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makers. >> sure. >> bob, we've not heard from you since all the trouble broke out at general motors, your former employer. i think we're now at 14 million vehicles that have been recalled by gm. what color can you give us if what is your position? what are you able to say to us? >> first of all, with -- despite the space of recalls which i think what general motors is doing is they're cleaning out the drawer, and just looking at everything that might some day be a safety related recall and just saying look, let's get it behind us, let's just recall everything. and that way we know we won't have any more problems. secondly, even with that, general motors is by no means at the top of the recall heap. there's still sort of in the middle of the pack when it comes to percentage of cars recalled. thirdly, this is an issue that seems to captivate the media,
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but the u.s. public absolutely couldn't care less. there's very low public awareness of recalls anymore. and from what i here from the guys back at the company is it hasn't affected sales one bit. >> so if you have one piece of advice for mary barra what would it be in. >> to whom? mary barra? oh. be tough and say what you think and at the face of tough questioning when you have to, bite back. don't just sit there and take it. >> good to talk to youp. thank you for your time. bob lutz joining us there. former vice chairman of general motors. >> we want to show you live pictures right now at the united states military academy at west point where president obama is about to deliver the commencement address. the president set to use today's speech to lay out a foreign policy vision for his final 2 1/2 years in office. >> over to carl and julia at the
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code conference for a very important guest. guys? >> all right. thank you so much, simon. would comcast $45 billion takeover of time warner cable give the company too much power? at least over the nation's cable and broadband markets? the argument made by "the new york times" editorial board yesterday as to why the deal in their view should be blocked by federal regulators. joining us a the code conference is brian roberts the chairman and ceo of comcast the parent company of nbc universal and nns. julia joins you -- and nbc. julia joins us as well. the kind is going to create a cohas sis since the break jun of at&t. did selling this deal get more difficult? >> i don't think so. they're entitled to an opinion. they got a lot of facts i think they didn't look at right in the days of at&t that was one phone company. it's truly an antiquated notion to say there's no competition in
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video. we've lost video customers for 26 straight quarters until two quarters ago from satellite, directv, dish network, verizon, at&t and fios and u-verse. people who are core cutting. a changing space never been moving faster, and i think that they were looking at the wrong thing. "the washington post," chicago tribune, all had a different point of view. they're entitled to their snoon so much opposition centers on the idea that you controlling so much broadband access, bad for the little guy, for start-ups. what are they getting wrong? >> first of all, both in video and in broadband we don't compete with time warner. we have to start with that fundamental point. we're in philadelphia. they're in l.a., we're in san francisco. you can't buy a comcast in new york, can't buy a time warner in philadelphia. so there's no reduction in competition.
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in broadband or in television. secondly, you have federal rules around the business in broadband and we're going through the open internet question. we support an open internet and having rules that the right kind of rules that are legally enforceable and allow for investment and innovation and give consumers great confidence they can do what they want to do and never going to be slowed down, never going to be blocked. some of the things we've read squaring people has not ever been how we've had our successful business selling broadband. finally we have too much broadband. again you can't buy a comcast broadband in new york. the total of this transaction is that we're going to go to about 29% market share, let's use video, we were there before. about ten years ago. with the competition we've come back to 22. the courts have looked at this question and said if you're less than 30%, that's what the fcc wanted. that's even too low of a standard.
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and in broadband i think there is no national broadband market. it's a local market. we have competition from the phone company, clearly wireless and wi-fi and google fiber and other innovation. if we work at our company all we're worried about is competition, competition improving. we've increased 13 times in 12 years and don't think there should be an issue with going 7 million customers bigger. >> reed hastings is here. netflix pays you for some access. at the same time it says this deal would give you anti-competitive leverage. have you talked to him? where does that conversation stand? >> we have talked to him and we've had an agreement between the two companies which we did five days after we announced time warner cable. the information seemed at the time he put out positive statement ps it's a fundamental business dispute. he would like all of his traffic not the connectivity, but just the transit, the cdms they call
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it, content delivery networks, to the open internet. that first part the first mile, not the last mile, he would like that all for free. he's been paying other carriers to do it for him. every other major traffic provider uses transit or somehow pays someone to get it to the open internet. and, of course, he would like it for free. it's a business dis putt. who wouldn't like it for free. you used to pay the post office three quarters of a billion dollars to send dvds around and they're used to wanting it to now be free. the other hand, we don't want to charge netflix different than any other company but they do amount to a third of all the bits on the internet. we want to provide great experiences for our customers and we have to manage that traffic together with them and the deal that we made was they reduced their expenses generally speaking over the life of the agreement and speed up the experience getting it to the
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internet. so customer performance is better, they've saved money. i'm not sure why that isn't in everyone's interest. >> now we're in the midst of this debate about net neutrality. we're in the midst of figuring out what the net neutrality rules should look like. reed hastings says your behavior has been anti-net neutrality, although obviously you debate that. now comcast has agreed to comply with the old rules for several years but what do you want the new rules to look like? eventually it will impact you. >> when they wrote the old rules, to make sure the viewers know what we're talking about for the open internet 20, 10, the fcc put out rules for the open internet and we supported those rules. so much so when we bought nbc universal we were asked would you agree to the rules even while challenged in court and we said yes, through 2018. when the rules were challenged in court by verizon, which we did not challenge those rules, they have remanded it back to
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the fcc to clarify certain areas. we've said we would like to work with the fcc to have clarity for consumers is important, support openness, we want people to really know there's teeth in that sfns. and at the same time we don't want to go so far to a type of regulation that some have advocated that would be like the 100 year old phone monopoly where the rules were written 100 plus years ago and can regulate every part of your business. these are industries changing so fast. america's competitiveness, small businesses, innovation, have all relied on the internet and improvements in innovation constantly getting better. to regulate it like a phone company that was the only provider ignores the reality of this industry in my opinion and many others and we've said that time warner cable, if we complete the transaction, will be under our commitment to open internet through 2018, once again giving chance for the government to put in new rules,
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hopefully the same types of rules that calm this debate, there's not a problem, this is only exist because there was a court ruling. no one has accused different companies of behaviors. i don't believe in violating any rules. there's not a problem here. it was important to get something back in place that everyone can feel good about and that's what we hope to happen. >> if i'm a regulatoregulator, at&t/directv deal make me more happy about yours because there's another strong player or is it too much too fast and don't want to talk about that? >> i don't want to comment on their transaction except i would say confirms it's a constantly changing area. time warner was in play, dropped cbs, lost cable customers, charter was running a host still slate to buy the company and something was going to happen. it was can we go from being a regional company which is what comcast is, my dad started
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comcast 50 years ago, 30,000 communities, each community got a cable license. no business before or since has been started that way the geography today is the cloud. you click amazon go anywhere, go to google go anywhere. you go to, you know, facebook all over the world and here we're not in new york and not in los angeles. we took a look at this situation and said, becoming more of a natural company was a great once-in-a-lifetime opportunity with time warner for the first time ever putting those markets for sale and secondly, that we would be under this 30%. and so -- we looked at our competition directv which at&t is buying and every home in america can get directv so when they want to get a program like sunday ticket, everybody -- nfl knows what everyone can now see my programming. if you only sell it to comcast, what about time warner?
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in a world where you see lots of competition having more of a national footprint not the 50-year-old regional footprint was important to us. the case of at&t and directv they'll make their own case of why they're trying to do this but confirms for me businesses don't stand still, markets evolve, competition is clearly robust and i'm glad we're going to make the case and hopefully make this deal happen. >> when it comes to broadband i understand you're experimenting with usage based pricing, bad news for netflix users. how do you roll that out without frustrating users who don't want to pay more. >> we have experimented in two or three markets with some usage based pricing. obviously the notion that we don't want to frustrate customers. we've gotten rid of any kind of cap and we are looking for ways to share the cost of this network. it's exploding, 30 to 40% increase in the amount of bits people consume every year for 20
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compounded years in a row and probably the next 20 years. that's an exciting high-class opportunity and we'll keep experimenting but at the moment we don't have new news on that kind of pricing. >> finally, should end on a note, x 1 is a hit, right. the olympics through 2032. nbc number one for the first time in ten years. >> yeah. >> does -- is everything the time warner deal, does it make everything else that's going well make it too noisy or not? >> we knew it would have lots of review and, you know, we built this company at different moments over 50 years. my father, myself, a lot of great people who have worked at the company to give ourselves an opportunity to try to keep innovating and competing. be here for 50 more years. i would like to say to people, you know, do you know what the future is? i surely am not sure. so you try to get smart people and lots of diversified assets. in the case of nbc universal things could not be going
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better. steve burk and his team, and neil smith and mike who helped us put this transaction toegs, a wonderful team of people. at nbc universal we completed number one for the first time in a decade. we have had wonderful run at universal pictures, fay bores ca -- neighbors came out a couple weeks ago. universal theme parks opening, harry potter 2 this summer, largest new hotel in north ameri america, the cable channels, usa, and the olympics draws it all together. to have the international olympic committee award us the games by saying this is the company we prefer to do business with, we're not going to have an auction, just going to renew with you for an unprecedented amount of time, through 2032, profitable in sochi, in london, so with a 1% increase in costs through 2032, which is what the
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deal works out to, we're going to have a great run, invest in the olympics, in technology, exciting time to be at the kem. >> you got a lot going on. not to mention your presentation at the code conference today. brian, thanks for stopping by. >> thank you, guys. >> brian roberts, chairman and ceo of comcast. simon, over to you. >> more big interviews to come. back to the markets, the dow is down 38, but copper is making new highs. dom chus that. >> a commodity we want to watch. proxy for global growth. copper prices hovering near three month highs here. the metal supported by optimism over the outlook for demand from, of course, china one of the biggest consumers in the world of that metal. really a modest recovery in chinese manufacturing is suggesting that factories have begun at least gaining some steam. utilization rates at china's major cable makers, users of copper, are bpicking up accordig to barclay's analyst. sentiment boosted by yesterday's upbeat u.s. durable goods report.
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copper shares up marginally, down slightly over the past three months. a nice optimistic view if you're looking for that bullish sentiment at least in one part of the market. sara, back over to you guys. >> thanks very much. bullish signals from dr. copper. thanks. straight ahead, luxury shoppers snapping up accessories and watches. michael kors, giving that company a revenue boost in the fourth quarter. comp store sales up more than 25%. why is the stock struggling today? more on that when we come back.
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the performance review. that corporate trial by fire when every slacker gets his due. and yet, there's someone around the office who hasn't had a performance review in a while. someone whose poor performance is slowing down the entire organization. i'm looking at you phone company dsl. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business.
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shares of the luxury retailer michael kors are slightly higher after you can see wild swings earlier in the session. one point up 5% better than expected quarterly results. bring in cnbc's retail analyst saysy widlets of sw retail advisors. good to have you back. what do you think about coursko why the swings in. >> the results came out, comps in north america are up over 20%, over 60% in europe. that sent the stock up. but then like any good high multiple stock, this company starts talking about normalization of the business and the street is waiting for that to happen which means margins will come down eventually. that hasn't happened yet but that's the elephant in the room. that's what the real discussion
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was on the conference call today and pressured the stock. >> because in essence, any company that has grown as fast as michael kors has, is going to mature the theory is, much more rapidly than would normally have been the case and at what point does that kick in seems to be the debate. >> exactly. >> what is your view? where are you on that? >> you know, you look at north america an the awareness here is almost about 90% for the consumers and if you look at what's been happening, stealing share from coach, we know that. coach comps down 20%, kors up 20%. i think at this point, now that you are looking at that normalization potentially of the business, you are going to see gross margins come in, so i think at this point the stock is fully priced here, fully valued. >> let's not underestimate what michael kors has managed to do given the retail investment, between the weather -- retail environment, between the competition, customers habits has been expanding but how has
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michael kors managed to dominate this category of affordable luxury not just in the u.s. but europe, home of gucci and the fashion designs. >> they've done a terrific job with making this a lifestyle brand and taking share away from the likes of coach but if you why to have been these luxury -- you have to remember these luxury brands have been raising prices 20% every year. so there's this space in the middle for accessible luxury 200, $300 bags and doing the best job out there in terms of in that space. so that's why they've been doing so well. but at this point you have to worry about, you know, over expansion, see bags just about everywhere on the street, and there's probably more opportunity in europe right now than there is really in north america. >> and what about the other half of the population, stacy? they're on record as saying look, we're going to expand our men's clothing. it's exactly as the same you're hearing from burberry. is that not a potentially new
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dawn for them, just not as profitab profitable? >> sure. everyone eventually goes moo the men's business. coach went down that road. sure, they like to have a trajectory of a growth path and explore all avenues which is why they're going and expanding in jewelry and other categories to make sure they have the growth trajectory. the base business, the core of the business is women's accessories and, you know, they're in the sweet spot of the price points. >> so stacy, if you think this stock is fairly valued, what is your favorite stock at the moment? what should people buy? >> my favorite stock right now is tjx. t.j. maxx. you look at the price channel, they're gaining share. they have significant store growth not only in north america but europe. it's a huge opportunity. a completely untapped space. and they're the only player over there. so that's what i would be looking at now, particularly after a very tough first quarter in retail where all these stocks
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really have come down quite a bit. >> you're telling us. thank you. stacy widlits joining us from sw retail advisers. >> the other big story everyone is talking about google co-founder sergey brin making a splash, revealing google has been designing and building a fleet of electric powered self-driving cars. >> we took a look from the ground up as to what would it be like if we had self-driving cars in the world and what should they be like and we've been building prototypes of that. >> and, of course, they revealed the images. there they are. pretty cute. self-driving prototype car, brin says google plans to build a few hundred of these prototypes, start testing the vehicle with safety drivers by the end of 2014. joining us now, john linkov, managing editor for autos at consumer reports, and phil lebeau, our auto reporter. john, consumer reports, you're looking at the safety, going to
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have to review these cars one time or another and the efficiency of the cars. from what you hear what do you make of them. >> it seems that google will look at using taxis first of all and something to help mobility for people who don't have access to cars in an urban setting. you know, i'm not really buying into it that they're going to have it immediately, maybe ten years. maybe my 2 and 4-year-old will be in these. when technology does fail what's going to happen with a car that doesn't have any ability to control it? >> and phil, i wonder how it's reverberate pg in your world of the giant automakers? we don't know if google will sell the software behind this or make these cars themselves. how is it playing out? >> everybody's working on this right now, sara. you have to understand in the auto industry they realize that automated cars are coming in some fashion. maybe not fully automated as we're seeing with the new prototype that we're being -- taking a look at from google. keep in mind, the biggest hurdle for these vehicles to get out on the road are regulators. do you think the state dmvs will
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authorize a car for people to buy when no steering wheel, brake, gas pedals. they will be hesitant to allow you and i to get behind the -- in the front seat of a vehicle that if there's an emergency, there is no way for us to stop the vehicle. >> you can't stay behind the wheel. >> the biggest hurdle. >> there is no behind the wheel. >> no behind the wheel. i wonder, part of google -- google's plan to make a safer car. the sensors would be able to pick up, for instance, more than a human would be able to pick up signals or dangers ahead. john, do you think they can make a convincing case this would be safer? >> they talk about how it's going to be reading lines, it's going to be reading the traffic lights, et cetera. when a road gets repaved and lines aren't there you can't use that road anymore. what if that's your destination. it's a proof of concept. they will try to sell it other manufacturers. look at tesla, having a heck of a time trying to sell cars on their own. google doesn't want to get into that. that's a money waster.
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>> you guys have been very pessimistic here. you know, you're framing it to the nth degree. saying can they get on the road now and will it work. there are markets, john, loads in which i don't have control of the transportation i'm in. when i go to the airport and they take me in one of these trains across the skies. to the adventure park and certain private estates i might be in a vehicle i have no control over. that's a huge market potentially. these things have novelty, they're smart, they will raises the profile of wherever they are. even if they're just going around parts of an estate to take me to the spa, there is a market for that if they can mass produce them. >> a small market. >> certainly a market. >> go ahead, john. >> that will allow people who don't have mobility option, the elderly, the inferm. you can drive a lexus, bmw, audi, many cars right now that will have these features that allow you to self-drive to an
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extent. the technology is there. to go to a car that nobody has a steering wheel p no control and relying on the technology to not fail, even the redundant technology to not fail, that's a huge step and we're not at the jetson stage yet. >> let me add one quick thing. you and i have talked about and others who have covered the auto industry, the bottom line is this, at the end of the day, these vehicles we're going to see gradual automation examining into vehicles. everybody has said that. cars los said they expect that by the end of this decade we'll see some automation in vehicles. you are never going to see a day -- i shouldn't say never. unlikely you'll see any time soon a vehicle that does not have a steering wheel. state regulators will look at this and say there is potential there but i want people to have that option to take control of the vehicle. >> i find it fascinating as an observer at the edge the way in which old detroit, old automobile and bob lutz prime example from gm on this show in
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this hour, have been so aggressively negative about what seems like -- >> it's not negative. it's realistic. >> for this country -- >> it's realistic. >> it's the reality of the way people are. i don't trust the human driver or human occupant to just sit and let a car go. when done playing, you know, clash of clans because the car fails, then what do they do? >> i'm a pretty terrible driver myself and i'm looking forward to it. i think it would be safer to have me not at the wheel and i don't think i'm alone. it is a debate we'll talk about it. thanks for joining us on google's driverless car. still ahead, valeant adding more cash to its offer to buy allergan. the bid could be worth more than $50 billion. we'll take you live to the valeant investor meeting after the break. oh my god! look. you need to see this. show 'em the curve. ♪ do you know what this means? the greater the curvature, the bigger the difference. [sci-fi tractor beam sound] ...sucked me right in...
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245 on the ten-year yield, an intraday low. we have to go to chicago. rick santelli with the santelli exchange.
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good morning, rick. >> good morning, sara. indeed, i see two 2.44 now. everything i do on a comparison basis is always based on closing levels. so at 2.44, if we were to close right here, it would be the lowest yield close since june 20th of last year. so we were initially in july, we keep comping back farther and farther. you know the drill plp treasuries are really augering that something is fishy in the global economy. and i agree. but i think what's fishy is a red herring. there's so many red herrings out there. it's amazing to me that we have a global economy that's calibrated in managing things like rates down to very low levels, predicated on the back of much debt, and yet we can look at it equity market, globally, whether it's the dax or the dow or the s&p, or the french stock market, we can see that they go up, but the amount of kicking the tires with regard
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to that activity, is minimal, even though we know that there are earnings discussions to have that may be simpler than trying to dissect what's going on with rates but we are calibrated for virtually extremely low interest rates and, of course, that makes a huge difference in the earning power of corporations. but maybe the key is, we're in a global economy. i don't care what anybody says, it seems pretty hard for me to understand that the ecb on one hand thinks things are okay, but they're talking about more stimulus, they're talking about lower rates, and everything in the u.s. is peachy. no. doesn't work that way. i think one of the biggest red herrings by far the biggest red herring is deflation. this is the red herring of all red herrings. it isn't like 1932 and 1933 where we see 30% drops in gdp, 25% unemployment and real deflation that's chronic and systemic. we have bouts with small amounts of it.
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they're going to make this in the ecb the king pin. the keynesians have failed. you can't make everything right by managing it and turning straw. a real market emerges. so whether it's belgium or whets buying treasuries -- make it china. let's put the strands together. we see the china currency continues to weaken. we see what's going on in the ecb as we get closer to june 5. we saw the unemployment pop up 24,000 in germany, one of the biggest month-over-month pops since '09. with the u.s. it's we're relatively strong, we're stronger than they are it doesn't matter from a global standpoint, we'll continue to see central banks think they control all the pieces, but they can't. how-day know? just look at treasuries. back to you. >> thank you very much, interesting times to say the least. coming up on the show, carl is talking to linkedin ceo jeff
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wiener. >> that's exactly right, simon and sarah, julie and i are going to talk to jeff in a moment. we're asking viewers to tweet us your questions for the linkedin ceo, at #asklinkedin. we'll be right back. [ male announcer ] this is kevin. to prove to you that aleve is the better choice for him, he's agreed to give it up. that's today? [ male announcer ] we'll be with him all day as he goes back to taking tylenol. i was okay, but after lunch my knee started to hurt again.
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for the botox maker allergan. now being worth more than $50 billion. valeant holds a public investors meeting and we're live with the latest. good morning, meg. >> good morning, simon. so we're just inside for this investor meeting has been going since 8:00 amt. the ceo mike pearson and his team make the case for why the raised bid for allergan make sense. valeant's business mod sl unsustainable. that its growth comes from price increases rather than selling more products and it doesn't know how to manage global brands like ailer agains. valiant is offering a contingent value writer, tied to a pipeline
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asset for macular degeneration. however, both company's stocks are down and an analyst i was talking to said allergan shareholders may be looking for a higher price per share, now we're looking at $166 at the raised bid. maybe the down stocks indicate investors are a little less, expecting for the deal to go through. sarah? >> well, turning into quite the soap op raeropera. thank you for the update. coming up on "squawk alley" an all-star line up live from the code conference in california. former ceo of the "huffington post," eric hippeau will weigh in on the future of media we'll be right back.
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and a free 30-tablet trial. straight talk from guest host ken langione and cutting-edge tech tomorrow on cnbc. we're looking at flat equity markets, simon, that's what everyone is watching, the 10-year note yield and the 30-year note yeemd. we're seeing fresh lows during the session. the 30-year yield lowest since june 2013 and the 10-year the lowest since last july. what's it telling us in the face of a record-high stock market and seemingly improving economic
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data. rick santorum talking about it. and we're watching it. >> a lot of people buy treasuries for the asset appreciation. they don't always buy it on yield. so people are making money in that trade. let's be clear. a lot of people got hurt very badly. but they're making money within the trade. >> yes, as the price continues to run even higher. and the dow down 34 points. the s&p holding near a record. >> we're out of time on this program, let's send it over to squawk alley live from the code conference in california, take it away, carl. >> thanks so much, simon. it's 8:00 a.m. at code conference, in rancho pal palos verde in california and "squawk alley" is live.
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♪ ♪ ♪ ♪ good morning, we're broadcasting live from the inaugural code conference in rancho palos verde, california where cnbc is providing exclusive coverage throughout the day joining us this morning our own john ford talking about technology in front of an incredible vista overlooking the pacific ocean. you've been up for six hours, recapping what we saw here yesterday. >> yeah. yeah. has it only been six hours? because it feels like a lot longer than that. but sergei brim, gen ewynneth paltrow. all three different, but driverless car designed by google, microsoft's skype translation service. which some people in the audience who speak german said isn't quite ready for business conversations.
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